By Drew Bollea

SACRAMENTO (CBS) – The road to legal cannabis is hitting a few potholes. A new report from a cannabis business organization shows that only a fraction of the marijuana cultivators in California have state approval to operate.

What’s causing the hold-up?

California grows more cannabis than any other state, but most of it is still being grown illegally.

“They’re going to go further into the shadows. They’re going to put their heads back down,” said Hezekiah Allen about what could happen if more cultivators aren’t brought into the legal market.

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Allen is the Executive Director of the California Growers Association. His organization interviewed thousands of growers and found several issues with the licensing process.

“What we’re trying to do is highlight some of these problems early enough that hopefully some of these businesses have a pathway forward,” said Allen.

Allen says only .78% of the growers in California have state approval to operate.

Getting approval is a long process for cultivators. Before the state can sign off on a cultivator’s application, the cultivator must first have approval from their local jurisdiction.

“We think that’s about as many as 70% of the growers in the state simply can’t get a permit to apply for a license,” said Allen.

Sacramento has more than 150 cultivators who’ve submitted a city application, but none have been approved so far.

“We’re in the process of evaluating those proposals right now,” said Joe Devlin, Sacramento’s Pot Czar.

Devlin says they are vetting the applicants to make sure each one meets all the application standards.

ALSO READ: Sacramento Business Group Wants Cap On Cannabis Companies

Sacramento may be ahead of the cannabis curve. Some cities and counties have banned marijuana. Others haven’t yet finished writing their cannabis laws.

“You’re seeing different rules, different regulations. What’s compliant in one county could be a violation in another county,” said Allen.

One-time fees in the hundreds of thousands of dollars are another permitting obstacle to smaller operations.

“A bigger business that is going to do a lot more volume is going to absorb those costs much more easily,” said Allen.

Allen says the lack of legitimate businesses is leading to the backlog of retail product on dispensary shelves. A shortage that is likely to continue.

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